Evercore takes a deep dive into Apple's ad business

Adding ads to the Maps app would be the logical next step. -- Analyst Amit Daryanani

From a note to clients that landed on my desktop Sunday:

ALL YOU NEED TO KNOW: Apple’s advertising business remains small compared to its megacap peers, but it will likely be one of the main engines for growth over the next 5 years.

The majority of advertising revenues currently come from App Store ads, but we see numerous avenues for Apple to expand advertising across its platform. Adding ads to the Maps app would be the logical next step and we estimate Google generates billions from advertising on Google Maps.

Apple has called out quarterly records for advertising revenue in each quarter since the roll out of ATT and we think the business can sustain high growth rate to hit $20B in revenue by FY26 (currently ~$3B in revenue). This would still rank Apple below AMZN’s ~$30B in advertising revenue and well below the $200B GOOG generates.

Longer-term, we see potential for Apple to go after the search market, especially if regulators eventually decide the large payment Google makes to Apple for being the default search option is anti-competitive.

Net/net: Advertising presents a great opportunity for Apple to better monetize its 1B+ install base at a high margin.

Maintains Outperform rating and $210 target.

My take: Funny Apple got serious about advertising one week after it kneecapped Facebook. Cue Evercore's timeline (click to enlarge, not to scale):

See also:


  1. Robert Paul Leitao said:
    @PED I like your take. Coincidence? Nah. I don’t see the App Store as a primary driver of Services revenue moving forward. Apple’s App Store revenue growth is now subject, in part, to the whims of over-zealous regulators in the US and EU as well as politicians starved for sound bites and desires for acclaim. All are misguided but the impacts are real. Sure. I’ll tolerate some more advertising from Apple. I have confidence my personal information isn’t being sold to the likes of Meta and the global privacy-depriving data merchant cabal. Apple has all the characteristics of a wide moat enterprise despite the limited world view of firms that categorize the company as primarily a device maker with price targets that evidence their individual and collective lack of vision. In my view, Mr. Daryanani is among the few analysts – along with Katy Huberty, Dan Ives and Wamsi Mohan – willing to do the deep dive and the resulting hard work to reveal Apple’s current and future value.

    May 15, 2022
  2. David Emery said:
    I SURE HOPE Apple doesn’t go down the nasty advertising path! I stopped using Apple News because the ads were more obnoxious than on Google News (by a long shot.)

    It’s time for Apple to stand up and say “We can do business without ads, and That’s The Right Thing To Do.”

    May 15, 2022
  3. John Konopka said:
    I have mixed feelings about this. I don’t mind ads if they are not too intrusive. Static images can be informative. I really hate ads that popup or slide in or otherwise animate in front of your eyes.

    I read my local paper as a PDF version of the print form. I read many of the ads and sometimes patronize the businesses I didn’t know about before.

    May 15, 2022

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